The Bidding War for Hulu Is Heating Up

The premium video streaming service Hulu is up for sale but no one wants to pay what it's worth. The only bids announced so far have come in much lower than the company's $2 billion valuation. So, what gives?

AllThingsD's Kara Swisher reports Yahoo!'s bid for Hulu, the streaming service currently co-owned by NBC Universal, Fox, and ABC-Disney, is in the $600 to $800 million range. (The price depends on the length of the service's content contracts.) Reuters previously reported former News Corp. executive Richard Chernin bid $500 million for the service. From what little we know, Marrissa Meyer and crew are in the lead, despite those being the only two prices that have leaked to the media, with other bids coming in from DirecTV, Time Warner Cable, and private equity firms Guggenheim Digital, KKR and Silver Lake Management.

Also, the importance of content deals cannot be overstated. It will be difficult to unload Hulu on a new owner without lengthy content deals in place. Chernin made extensions on the deals part of his initial bid, too. The lengths of those deals will be an important bargaining point for both sides going forward. No one wants to buy streaming service that will run out of shows in a matter of months.

Remember: this is the second time Hulu has been on the open market. They tried and failed to sell the streaming site in 2011. But, as Swisher notes, anything less than $1 billion will likely be rejected by the site's current owners. So if no one wants to made a deal near Hulu's asking price or Hulu extend their content deals as part of a sale, there's always a chance they could pull the service off the market again. That seems very unlikely if they start a bidding war in the press, though.

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